On Sep 30, 2014, we issued an updated research report on Autoliv, Inc. (ALV). The company reported positive earnings surprise in two of the trailing four quarters, with an average beat of 1.5%.
Autoliv reported second-quarter 2014 adjusted earnings of $1.45 per share, missing the Zacks Consensus Estimate of $1.54. Earnings decreased 2% from $1.48 per share reported in the second quarter of 2013.
Consolidated revenues rose 8.4% year over year to $2.38 billion, marginally beating the Zacks Consensus Estimate of $2.33 billion. The improvement was driven by higher-than-expected vehicle production in North America, Europe, Japan and South Korea, partially offset by a decline in light vehicle production in Brazil. In addition, there was higher demand from China. Demand for active safety products also increased.
From Jan 1, 2015, Autoliv will change its reportable segments to Passive Safety and Electronics. The change in operating structure is expected to facilitate growth and help the company to effectively manage operations. It should also facilitate the implementation of Autoliv’s business strategies.
However, there are concerns stemming from stiff competition and high dependence on a few customers. General Motors Company (GM) is the biggest customer of Autoliv, followed by Ford Motor Co. (F) and Renault-Nissan. The top 5 customers represent about 54% of sales and the top 10 represent 83% of sales. Thus, loss of any key customer could considerably affect the company’s earnings.
Further, while Autoliv occupies a leading position in the market, it faces stiff competition in passive safety products from Takata Corporation and TRW Automotive Holdings Corp. (TRW). Moreover, low vehicle production in some regions could weigh on Autoliv’s performance.
For 2014, the company raised the organic sales growth guidance to 6% from 5%. Autoliv also projects operating margin of around 9%, excluding capacity alignments and antitrust investigation costs.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment